Building specific eco-systems Introspection by Village Capital in New York yields insights into the roles and activities of entrepreneur support organisations
Most entrepreneur support focuses either on the founder or on the investor. But it is important to identify the specific role in the middle of the “Pioneer Gap”: the ecosystem builder, says a report for the Kauffman Foundation by Village Capital in New York. ‘The people who run accelerators, incubators, seed funds, and other entrepreneur support organisations (ESOs) play a critical role in their communities’.
(Village Capital works by identifying real-world problems, and finding, training and investing in entrepreneurs, and building communities around them and their ventures – to improve opportunities for growth and success. Since 2009, when it opened its doors, it has supported over 500 ventures in 45 programmes.)
The report ‘s special contributions are around the qualities to select for and to work on in founders; and on enhancing mutual understandings between startups and funders. And Village Capital’s comments on their latest inclinations (at the end of this paper).
MIT is not alone is asserting that accelerators contribute to local development, stimulate economic growth by bringing jobs, financial opportunities and people to their area of operation.
One of the report’s findings is that programmes that are sector specific raise more funds, attract better entrepreneurs and are more likely to run, and to succeed. Significantly, they attract more targeted and more useful mentors and partners.
Few entrepreneur support organisations find that they can pay for this work in full, says the report, and need to find/use revenues from other sources, such as consultancy or other services, grants (from private or public organisations), or from other benefits that they provide (eg meeting local needs).
In designing their curriculum, ESOs should be clear about their objectives: to what extent are they about product validation, developing strategic partnerships, creating quality jobs, solving sectoral problems or making money as quickly as possible. They should use measurable targets.
In curriculum design and in selection, while most accelerators rely simply on advertising their programme to attract applicants, evidence strongly
suggests that quality is more important than quantity, that you should look to draw on sectors that your accelerator will hope to stimulate, and aim to find matches between entrepreneurial potential and business type (can Myers Briggs tests help, asks the report). ESOs should strive for transparency, collaboration and communication, and peer feedback.
Village Capital’s research examined eight common characteristics of founding team members:
- Acumen – knowledge of business and market
- Adjustment – emotional and psychological adjustment/self control
- Ambition – need for achievement; drive to accomplish
- Originator – individualistic; spontaneous decision-making style
- People-focus – perceived level of concern for people
- GRIT – confidence, resilience, perseverance
- Persuasion – perceived ability to get things done through others
- Team build – perceived ability to energise, motivate and inspire team members
And added three riders:
- Spontaneity has a negative correlation with successful leadership
- Self-awareness has a positive correlation
- Female founders outperform their male counterparts.
The report stresses the importance of founder awareness in curriculum planning – in terms of
- actionable feedback (including from peers)
- realistic milestone planning.
Village Capital’s founding philosophy is about peer selection and ranking, in order to mitigate investor bias (and skewed power dynamics), to empower entrepreneurs, and to evaluate startups and startup leadership on their own merits (eg in terms of market potential, team strength, founder coachability, go-to-market strategy, traction and execution.).
VilCap has put a lot of work into building tools for the better assessment of teams and companies – especially in terms of venture investment readiness and awareness. This has included a definitional matrix – of stages of progress, designed to help entrepreneurs and investors use the same language, entrepreneurs to become more self-aware, and to enhance entrepreneur-investor conversations.
Village Capital’s model now emphasises
- spending less time on the curriculum and more on teams working on their own;
- emphasising networking and collaboration (eg in your sector);
- startups should focus on developing com-munications, networking and organisational structures; and less on financial skills;
- mentor quality and matching are the keys to success;
- peer investment selection.
The VilCap Model is available as a toolkit – for those seeking to make use of Village Capital’s knowledge and experience.
* VilCap.com – Reports. A year of Vilcap communities: how ecosystem builders can best help entrepreneurs succeed, 2016.
* And a previous blog of mine about Village Capital at https://wp.me/p3beJt-lN Oct 2017.
John Whatmore, March 2018